Off-payroll Consultation March 2019

A consultation document on the Off-payroll working rules from April 2020 was published by the government on 5th March 2019.

The consultation document clarifies that the responsibility for determining IR35 rests with the client, instead of being passed down the supply chain to the agency. The client must communicate this decision directly to the contractor, giving reasons for their determination when necessary. This seeks to improve the effective sharing of information between all parties involved.

The responsibility for deducting income tax, NICs and paying any employer NICs will rest with the organisation paying the contractor’s fees (usually the agency or Umbrella Company). The document also clarifies that liability will rest with the party that has failed to fulfil its obligations, until those obligations are reached. The liability will then move down the supply chain as each party fulfils its obligations.

The document states that where the client and contractor are in disagreement about the employment status, a client-led disagreement procedure should be put in place. The document suggests this will mean that more workers and clients will reach the correct IR35 position in real time.

The consultation met with widespread criticism from independent bodies, who claim that the document does little to address the fundamental problems with the Off-payroll reforms. For example, the document does little to address the ongoing problem of the government’s notoriously unreliable self-assessment tool, CEST. Meanwhile, a client-led disagreement procedure will undoubtedly place an increased administrative burden on the client, while placing the contractor at a considerable disadvantage.

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